This piece is part of our ‘Climate Policy Engagement’ series. To ensure integrity and accelerate meaningful progress towards halving global emissions by 2030, Race to Zero is a green demand aggregation initiative i.e., showing governments that the private sector is wanting investment in green solutions like green cement, green steel and climate solutions. A key feature of green demand is securing procurement policies that support the transition to a net zero, resilient economy.
Spending power of governments
Governments are major actors in the economy—not just because of the policy decisions they make, but because of the huge number of goods and services they buy. Among OECD nations, public procurement expenditures represent 13% of their combined GDP. Like other demand-side innovation tools, procurement can spur innovation for climate solutions.
Canada’s green procurement rules
In 2023, Canada’s federal government introduced new green standards for major government construction contracts. The recently updated Standard on the Disclosure of Greenhouse Gas Emissions and the Setting of Reduction Targets outlines that federal government procurements over $25M must incent suppliers to disclose their GHG emissions and set reduction targets. Suppliers can fulfill this requirement through participation in Canada’s Net-Zero Challenge or approved international standards, including the Race to Zero campaign. Federal construction projects will also soon be required to achieve 30% reduction in embodied carbon in new construction, starting in 2025.
“Government procurement accounts for 13% of Canada’s GDP and up to one third of the market for construction materials”, says Ollie Sheldrick, Program Manager at Clean Energy Canada. He adds:
Green procurement policies can help drive down emissions and support low-carbon Canadian companies and their workers
Clean Energy Canada, a climate and energy think tank based out of Simon Fraser University, played a role in mobilising the updated standards with their work on low-carbon procurement in government funded construction or ‘Buy Clean’. This began in 2017, when they issued a publication on The Power of Procurement. They argued that procurement can be done in a way that is economically beneficial while reducing emissions.
Since then, Clean Energy Canada has gone further, bringing together a Buy Clean Industry Alliance with members comprised on national industry associations representing cement, steel, forestry products and others. They have also produced a number of reports on ‘Buy Clean’ procurement including Money Talks, which quantified the emissions reductions that could be achieved from all levels of government in Canada procuring low carbon construction materials. This also highlighted the importance of applying Buy Clean standards to all levels of government in a highly devolved jurisdiction like Canada. In 2024 the federal government announced that it would apply the Greening Government Strategy standards to Crown Corporations (semi-independent, government owned organizations such as the Bank of Canada or Canada Post) and committed to applying them to future sub-national infrastructure spending.
Scaling green procurement in Denmark
Denmark has recognised the environmental responsibility of public purchasers since 1991. More recently, in 2020, the former national government launched a new strategy to promote greener public procurement. This ‘Green Procurement for a Green Future Strategy’ included a joint government food policy to be introduced, where vegetarian food would be introduced two days a week in all government canteens and 60% of all food organic; a gradual conversion of the entire public vehicle flee to EVs by 2030; and an annual calculation and projection of the climate footprint of public procurement to be developed and implemented. Despite these positive policies, the Climate Council assessed that the incentives to reduce emissions from public procurement was not large enough, and there is a need for further incentives to act.
Green public procurement can make a big contribution to drive a faster green transformation by creating a stronger and earlier demand for products and services with a low carbon impact
“But strong and ambitious political goals are a prerequisite to speed up this transformation”, says Bjarke Møller, Director of Green Transition Denmark.
In May 2024, Danish Business, Danish Industry, the Green Transition Denmark, Concito, Ecomarking Denmark, Denmark’s Nature Conservation Association, FSC DK, The Green Youth Movement, Climate Movement and Ethical Trade Denmark joined together in a joint appeal to the Minister of Finance to speed up work on a national strategy for green public procurement. They argue that “green considerations should be a fixed and integrated part of all public procurement”, and that when public procurement makes up nearly 16% of GDP in Denmark, it has an “enormous influence”. Recognising the many good initiatives in place, the letter goes on to say that Denmark needs to go much higher up in pace and scale with clearer goals set by the government. The business and youth groups coming together on this issue of greener procurement provides a broad base of support for the government to respond.
Demand signals
Ahead of COP29, non-state actors around the globe are exploring ways in which they can create stronger demand signals for the products and services that will decarbonise major emitting industries. Green public procurement is one critical lever clearly in the remit of the government to set demand for the green products of the future, like green steel, green cement, alternative proteins and clean energy technologies.
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